Thursday, January 12, 2012

The whole point of changing the teaching of economics was to make it acceptable to trash the regulations that had been put in place during the New Deal to prevent another Great Depression. And as would become readily apparent, these regulations had been put in place to address real needs. Well written and administered regulations lead to more scientifically advanced and prosperous societies because regulations protect and permit honest entrepreneurs to thrive. The more complex the society, the more of these honest people it takes to keep all the parts working. Take away the rules and the cheaters will drive out the honest operators. The only historical outcome of "deregulation" is a rise in corruption of all forms and a destruction of industrial potential. Pretty much describes the past 35 years, huh?

Deregulation in all its forms has been an ongoing project. There are literally countless examples. This is just my list. I have also created a separate category for the decriminalization of usury because this involved special levels of cultural warfare.

Deregulation

1978 Airline Deregulation Act. Deregulating the airlines was in some ways low-hanging fruit. Importantly, airlines would still be tightly regulated on safety issues—it was the rate structures that would be deregulated. And the rate structures WERE in need of restructuring. Even so, the New Deal economists claimed that airlines had special requirements that suggested that economically, they should be treated as a regulated utility. So this was a good test case.

Since the passage of the Interstate Commerce Act of 1887, the federal government had regulated various transportation modes, starting with the railroad industry, and later the trucking and airline industries. Increasing public interest in deregulation led to a series of federal laws beginning in 1976 with the Railroad Revitalization and Regulatory Reform Act. The deregulation of the trucking industry began with the Motor Carrier Act of 1980, which was signed into law by President Carter on July 1, 1980. more

Gramm, Leach, Bliley and Commodities Modernization Act: These two pieces of legislation were passed at the end of the Clinton administration and they accomplished the most desired goal of the deregulators—financial deregulation.

1980 The Depository Institutions Deregulation and Monetary Control Act: This act accomplished many things but its most stunning achievement was it repealed usury limits. Usury laws were so entrenched at the time, some states had them written into their constitutions. To make certain this wildly unpopular bill was passed, the various banking interests launched a major P.R. campaign stressing how unfair it was that depositors couldn't get higher interest rates. But just to make certain everyone got the message, there was a well-coordinated "capital strike" and for much of 1979, lending dried up.

Here is a copy of the speech Jimmy Carter gave at the ceremony where he undid one of the cornerstones of Producer economics—usury laws. To this day, I wonder if he actually believed this horse shit.

Depository Institutions Deregulation and Monetary Control Act of 1980

Remarks on Signing H.R. 4986 Into Law.
March 31, 1980

THE PRESIDENT. This morning we are assembled in the White House to take action which will have far-reaching, beneficial effects on our Nation. Not only will it help to control inflation, but it will also strengthen our financial institutions, our thrift institutions and commercial banks, and in addition to that it will help small savers and address more effectively the relationship of the Federal Reserve System with the banks throughout our Nation.

Let me begin with some commendations. I think Bill Miller deserves a great deal of credit for having pursued this effort, even when the prospects for success were very bleak, first of all as Chairman of the Federal Reserve System, and later of course as Secretary of the Treasury. We have had good support in the Congress from Bill Proxmire, from Henry Reuss, from Fred St Germain, who's here this morning with us. And also, to make it nonpartisan, or bipartisan, I'm particularly grateful that Bill Stanton, Jake Garn, and many others have come this morning to commemorate this historic event. As you can well imagine, in legislation of this breadth and importance, many others played a crucial role, and I'm very grateful to all those who had a part. This is a moment of great gratification to me and, in addition, to the feeling of gratitude to persons that I've just described.

Last spring we began to become more and more concerned about the issues that affected our Nation as inflation was beginning to build up and as the rate of savings in our country was constantly dropping. I recommended to the Congress a landmark financial reform bill, which I will be signing in a few minutes into law. This is not only a significant step in reducing inflation, but it's a major victory for savers, and particularly for small savers. It's a progressive step for stronger financial institutions of all kinds. And it's another step in a long but extremely important move toward deregulation by the Federal Government of the private enterprise system of our country.

We've already had remarkable success in deregulation in the airline industry, this in financial institutions; we hope that the Congress will soon pass the regulatory reform act and that we can have success in the deregulation of the rail industry, trucking industry, and the communication industry.

As you know, under existing law, which this bill will change, our banks and savings institutions are hampered by a wide range of outdated, unfair, and unworkable regulations. Especially unfair are interest rate ceilings that prohibit small savers from receiving a fair market return on their deposits. It's a serious inequity that favors rich investors over the average savers. Today's legislation will gradually eliminate these ceilings and allow, through competition, higher rates for savers. It provides an orderly transition for institutions to develop new investment powers.

Most significant of all, perhaps, it can help improve our Nation's very low savings rate. Now not much more than 3 percent of earnings go into savings, perhaps the lowest rate in the last 30 years. And of course, this small savings rate has been a major factor in increased inflation. This encouragement of savings is important not only to consumers but also to financial institutions in the breadth of our financial system.

The new law will permit institutions to prevent or to overcome the previous wide cyclical changes and swings and to develop a more stable deposit base. This can help ensure steadier flow of credit for productive uses, especially housing. It can keep down financing costs and, again, help defuse the pressing burden of inflation. more

Of course, once usury had been decriminalized, the Fed's Paul Volcker ran up interest rates to 21% prime. The whole globe staggered. In fact, there are some very good arguments that suggest that large populations world-wide have never really recovered from the 1982 recession that was deliberately triggered for ideological reasons.

During his 1980 campaign, Ronald Reagan promised to end the economic and hostage crises that had plagued Jimmy Carter's administration. The hostage crisis was solved for him when, only hours after he was sworn in, Iran's Ayatollah Khomeini released the captive Americans. With one victory under his belt, Reagan dedicated himself to making good on his other promise. The American people trusted him to do so.

In February 1981 Reagan presented the Economic Tax Recovery Act to Congress, calling for massive personal and corporate tax cuts, reductions in government spending, and a balanced budget. The program was based on supply side economics: Tax cuts, the theory went, would allow people either to spend more on goods and services, thus giving the economy a boost, or to invest in businesses, thus leading to economic growth. The economic expansion, supply side theorists argued, would generate enough revenue to cover the shortfall resulting from the initial cut in tax rates.

In an effort to balance the budget, Reagan "propose[d] budget cuts in virtually every department of government." While he cut back social programs, including school-lunch programs and payments for people with disabilities, he refused to touch Social Security and Medicare. He also advocated deregulation of certain industries in an effort to reduce the government's role in the economy, and proposed such a massive military buildup that Pentagon spending would reach $34 million an hour during his administration.

At first some Republicans were skeptical and most Democrats were hostile toward the Recovery Act. To overcome opposition, Reagan lobbied hard in Congress and used his skills as the "Great Communicator" to persuade the country. One after another, Congressmen began to line up behind Reagan’s program. Feeling for Reagan swelled after John Hinckley, Jr.'s, assassination attempt on March 30, 1981. Perhaps his rapid, dramatic recovery was seen as emblematic of what the country could achieve under his leadership. By July 1981, Reagan’s economic program won the support of two-thirds of the American public and was approved by enough Democrats to get it through Congress.

When, in August 1981, Reagan signed his Recovery Act into law at Rancho del Cielo, his Santa Barbara ranch, he promised to find additional cuts to balance the budget, which had a projected deficit of $80 billion -- the largest, to that date, in U.S. history. That fall, the economy took a turn for the worse. To fight inflation, running at a rate of 14 percent per year, the Federal Reserve Board had increased interest rates. Recession was the inevitable result. Blue-collar workers who had largely supported Reagan were hard hit, as many lost their jobs.

The United States was experiencing its worst recession since the Depression, with conditions frighteningly reminiscent of those 50 years earlier. By November 1982, unemployment reached, nine million, the highest rate since the Depression; 17,000 businesses failed, the second highest number since 1933; farmers lost their land; and many sick, elderly, and poor became homeless. more

1982 Garn-St. Germain Depository Institutions Act: This one was a honey because it deregulated the savings and loan institutions. When Volcker raised interest rates to loan shark levels, the S&Ls found themselves in a world of hurt. Their assets were a bunch of 5% mortgages and their cost for money was 20%. So the "solution" was to let the safe and staid home mortgage business come to the casino.

The bill, whose full title was "An Act to revitalize the housing industry by strengthening the financial stability of home mortgage lending institutions and ensuring the availability of home mortgage loans," was a Reagan Administration initiative.

“This bill is the most important legislation for financial institutions in the last 50 years. It provides a long-term solution for troubled thrift institutions. ... All in all, I think we hit the jackpot.” So declared Ronald Reagan in 1982, as he signed the Garn-St. Germain Depository Institutions Act.

He was, as it happened, wrong about solving the problems of the thrifts. On the contrary, the bill turned the modest-sized troubles of savings-and-loan institutions into an utter catastrophe. But he was right about the legislation’s significance. And as for that jackpot — well, it finally came more than 25 years later, in the form of the worst economic crisis since the Great Depression. more

2005 Grassley Bankruptcy Abuse Prevention and Consumer Protection Act: The credit card industries weren't abusing anyone by charging 25% interest rates, of course, but it was never too early to prevent "abuse" by the borrowers. So the banksters passed this vile little act whose worst feature was that students could never discharge their loans through bankruptcy. The greatest single output of the USA educational system is debt peons.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) (Pub.L. 109-8, 119 Stat. 23, enacted April 20, 2005), is a legislative act that made several significant changes to theUnited States Bankruptcy Code. Referred to colloquially as the "New Bankruptcy Law", the Act of Congress attempts to, among other things, make it more difficult for some consumers to file bankruptcy underChapter 7; some of these consumers may instead utilize Chapter 13. Voting record of S. 256

It was passed by the 109th United States Congress on April 14, 2005 and signed into law by PresidentGeorge W. Bush on April 20, 2005. Most provisions of the act apply to cases filed on or after October 17, 2005. It was hailed at the time as the banking lobby's greatest all-time victory.

It was widely claimed by advocates of BAPCPA that its passage would reduce losses to creditors such as credit card companies, and that those creditors would then pass on the savings to other borrowers in the form of lower interest rates. These claims turned out to be false. After BAPCPA passed, although credit card company losses decreased, prices charged to customers increased, and credit card company profits soared. more